Uruguay was once known as the "Switzerland of South America" as a result of its relative governmental stability, advanced level of economic development, and social peace. Indeed, in the creation of a welfare state, it was far ahead of Switzerland during the first half of the 20th century. Starting in the 1950s, Uruguay's economy began to stagnate, and the oncevaunted welfare state became increasingly poor. Commentators talked of the "Latin Americanization" of Uruguay as it descended from the ranks of the developed nations to the level of the Third World. Political and social unrest eventually culminated in the military coup of 1973; by then the case for seeing Uruguay as very different from the rest of Latin America was largely undermined.

In sum, Uruguayan society in 1990 presented a contradictory picture of advanced social indicators and declining economic status. In many ways, it remained unlike other Latin American and Third World countries.